Here's why Google invested $1 billion in Elon Musk's SpaceX

Did you notice this big investment Google made last year? You may
have missed it. After all, the U.S. space company hadn't yet
earned itself a name for successfully landing a rocket on the ground just
after the rocket delivered a payload in space. But the investment
shouldn't be overlooked. Indeed, it may be one of
Alphabet's(formerly Google) boldest moonshots
yet: the tech giant made a big investment into SpaceX.

The origins of a $1 billion SpaceX
investmentIt's no surprise that
Alphabet is interested in space. After all,
Amazon.com, Virgin
Group, Facebook, and
Qualcomm, are among tech companies that have
invested in the development of either rockets or satellites.
Space offers another frontier for the information and
communication that technology companies hold so dear --
particularly Google. And it gives big companies a bigger purpose
to strive for. But what was surprising about Alphabet's SpaceX
investment was how big it was. The company, along with
Fidelity, together invested $1 billion into
SpaceX for 10% ownership of the private U.S. space company.

"Space-based applications like imaging satellites can help people
more easily access important information, so we're excited to
support SpaceX's growth as it develops new launch technologies,"
said Don Harrison, Google's vice president for corporate
development, in a statement about the SpaceX investment,
according to The New York Times.

And, notably, Harrison joined the board of SpaceX.

Based on Harrison's statement, the origins of the company's
motivation for the investment was likely rooted in SpaceX CEO
Elon Musk's announcement just before Google's investment. Musk
noted SpaceX would set out to build and deploy the world's
largest global communications systems via a network of hundreds
of satellites.

"Our focus is on creating a global communications system that
would be larger than anything that has been talked about to
date," Musk told Bloomberg last year.

Elon
MuskAP Photo/Jack
Plunkett

Alphabet may be more serious about space than it lets
onBefore Alphabet was formalized last year, the
company's projects like these were considered "moonshots." But
with the creation of Alphabet in August, these "moonshots" were
upgraded to "Other Bets" as the company structured its business
in a way it can give more focus to these side projects.

You can bet that whatever satellite initiative Alphabet works on
in regard to SpaceX, it's going to be one of the company's bigger
bets. With 10% ownership of SpaceX in conjunction with Fidelity,
the company arguably has a solid stake in what could become the
most important space company in our lifetimes.

And it's worth noting that Alphabet's SpaceX investment has
likely already panned out to be a bargain. Now that SpaceX has
proved it can successfully land one of its rockets after
returning from space, and with the rocket company now aiming for
a 70% rocket landing success rate during 2016
and planning to launch its Falcon Heavy later this year, it
probably sports a much greater valuation in the private markets
than it did when Google invested in it early last year.

Time will tell what Alphabet makes of its SpaceX investment, but
don't be surprised if it turns into something significant.